CN Rail TSX:CNR

A generation ago, the railroads were considered to be a relic of the past. Sure, those ribbons of steel had transported thousands of immigrants from Halifax to Montreal, opened up the Prairies and linked Canada from sea to sea by negotiating the Rockies. But all that was history. Passenger trains had been overtaken by jet planes, and freight could be moved more efficiently by transport trucks. Who needed railroads any more?

It turns out we all do. Not only did the trains survive, but the companies that run them have prospered. As the high- ways become increasingly clogged and the price of fuel soars, railroads have once again emerged as the most costeffective way of moving goods from point A to point B. And while long-haul passenger service has become more a luxury than a necessity, the commuter business is thriving, albeit with government support.

One of most successful companies in this business is Montreal-based CN Rail, the old Canadian National in modern dress. For most of its history, CN was a Crown corporation. In November of 1995, the company was privatized, and that opened up a new era of expansion and prosperity. Since then, CN has made several key acquisitions and streamlined its operations to the point where it is now the most efficient major railway on the continent.

Many people still think of the CNR as a pure Canadian railroad, but it is much more than that. The company actually bills itself as North America’s railroad, with justification. Its tracks extend through the heartland of the United States, down the Mississippi River corridor to the Gulf ports of Mobile, Gulfport and New Orleans. All told, CN has approximately 20,600 route-miles of track on the continent and employs more than 22,000 people.

This is another company that has rewarded patient investors. The stock has gained more than 375 per cent since 2002, and the dividend has been raised 11 times in the past decade, most recently by 16 per cent.